The MERCOSUR-Mexico Economic Complementation Agreement (ACE No 54) was signed during the MERCOSUR Presidential Summit that took place on 5 July 2002 in Buenos Aires, Argentina. The agreement establishes a legal framework for trade relations and sets the basis for periodic negotiations towards a free trade agreement.
The Agreement covers negotiations between the MERCOSUR bloc and Mexico, including the Mexico-MERCOSUR agreement on the auto sector, as well as bilateral negotiations between individual MERCOSUR countries -- Argentina, Brazil, Paraguay and Uruguay - and Mexico.
On the basis of this agreement, Mexico has concluded a free trade agreement with Uruguay and is in the process of extending the scope of Economic Complementation Agreement No 6 with Argentina and Economic Complementation Agreement No 53 with Brazil.
In July 2004, at the XXVI meeting of MERCOSUR's Common Market Council in Puerto Iguazú, MERCOSUR members agreed to initiate negotiations towards extending ACE 54 towards a free trade agreements. In this respect, the MERCOSUR Heads of State issued a Joint Communication signalling that Mexico would become an associate member of MERCOSUR once the free trade agreement is concluded. MERCOSUR countries and Mexico held their first negotaitions towards a free trade agreement in Asunción, Paraguay in May 2005.